Iceland in showdown with bondholders

Iceland will this week tell hedge funds and other creditors in its failed banks how their claims can be settled. 

The government has designed a model to protect the krona from any jolts that might result from a capital outflow as currency controls are relaxed to enable repayment. The next step is to find out whether the creditors will accept the deal.

“Creditors that are unfairly treated internationally do not just walk away,” Timothy Coleman, senior managing director of Blackstone Group, which is advising bondholders in Kaupthing Bank, said.